Update on COVID support for mortgage holders and business owners – 20th March 2020
Below we have summarised the assistance providers and the government are offering owner occupier and investor homeowners and small businesses.
In addition to these initiatives the Government raised the debt ceiling by $250 billion to $850 billion to pay for virus spending, with BIS Oxford Economics chief economist Sarah Hunter saying Australia’s Federal debt was low compared to other countries and with some luck the full $250 billion would not be required.
The Government also announced the budget will be delivered in October instead of May.
HELP FOR INDIVIDUALS
Providers are offering their home loan customers home loan repayment holidays from between 3 to 6 months and pausing of interest rate charges.
Some providers do not require any paperwork or evidence and a solution is worked through over the phone or online.
At the end of the mortgage-free-period, the loan will return to normal (or extended if required depending on the situation at this time). The additional repayments accrued through the “holiday” will either be capitalised into the loan, repaid within the loan period or the loan period extended. At this stage this appears to be case by case depending on circumstances. It will not impact your credit history.
HELP FOR SMALL BUSINESSES
Providers are similarly assisting small businesses offering assistance packages. This includes the pausing and deferral of loan repayments and interest charges and the extension of loan terms by up to 3 months. Any small business that has not been contacted can contact their bank directly to discuss assistance.
After the deferral period businesses will not be required to pay the deferred interest in a lump sum. Either the term of the loan will be extended or the level of loan repayments will be increased.Providers are also slashing their interest rates on business loans since the RBA emergency meeting held this week.
SME providers participating so far include AMP, ANZ, Bank of Queensland, Bendigo and Adelaide Bank, CBA, HSBC, Macquarie, NAB, Suncorp and Westpac.
However all providers are open to discussions.
Other measures from many lenders supporting eligible business loan customers include;
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Devoting “additional resourcing and extended hours” to process small business loans
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Fee-free redraws
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Restructure and consolidation of existing loans
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Early access to term deposits
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Deferral of business credit card repayments
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Access to business financial counseling
$17.6 BILLION STIMULUS PACKAGE – ASSISTANCE AVAILABLE TO SMALL BUSINESSES
The Government has announced an initial $17.6 billion stimulus package designed to keep
businesses in business and Australians in jobs. The Prime Minister has made it clear that the
stimulus package is targeted, measured and scalable.
As part of this initial package, measures for small and family businesses include:
$6.7 billion measure Boosting Cash Flow for Employers
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Tax free payments of between $2,000 and $25,000 to eligible business with a turnover of under $50 million, to provide temporary cash flow support to businesses that employ staff. This will work by giving eligible businesses that withhold tax to the ATO on their employees’ salary and wages receiving a payment equal to 50 per cent of the amount withheld, up to a maximum payment of $25,000.
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Eligible businesses that pay salary and wages will receive a minimum payment of $2,000, even if they are not required to withhold tax.
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This measure will benefit around 690,000 businesses employing around 7.8 million people.
$1.3 billion measure Supporting Apprentices and Trainees
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Employers of apprentices and trainees who employ less than 20 full-time staff can apply for a wage subsidy of 50 per cent, of up to $7,000 per quarter, for each trainee or apprentice they employ.
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This applies to trainee and apprentice wages paid for the period from 1 January 2020 to 30 September 2020 up to a maximum of $21,000 per eligible apprentice or trainee.
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This will support up to 70,000 small businesses and around 117,000 apprentices.
Increasing instant asset write off
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Increasing the instant asset write off threshold from $30,000 to $150,000, and
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expanding access to businesses with aggregated annual turnover of less than $500 million
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until 30 June 2020.
Backing Business Investment
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Businesses with a turnover of less than $500 million can, until 30 June 2021, deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Anthony Landahl | Equilibria Finance
This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article that you need to understand to ensure your personal circumstances are taken into consideration.
